Will Pay Transparency Work for Your Organization?

Workplace

“Curiosity killed the cat,” they say, “but satisfaction brought it back.” Fostering transparency is daunting, but there is satisfaction in an honest and open culture. Ignorance is not always bliss. One particular area of workplace culture where transparency is often debated is pay transparency.  There are both challenges and benefits in disclosing or concealing salary information.

You might do a better job not knowing how much your coworkers are paid. I have witnessed former coworkers with rightful access to salary information become bitter and angry, or immediately start searching for a new job after discovering their coworkers’ salaries.

One organization who has practiced pay transparency before it ever became a workplace buzzword? The federal government. Anyone able to decipher a federal employee’s grade, step, and location can easily determine a salary range. Why does a transparent pay grade and scale work for federal agencies but not contractors?

While federal pay is defined and clear, it is frustrating. Pay grade and scale aren’t always a clear indication of capability or even authority, but may be merely a reflection of seniority.

When faced with conflicting ideas, a pros/cons list is a good place to start. Here are the pros and cons of pay transparency:

Pros of a transparent pay culture

  • Fosters open and honest work environment. No one is confused about rank or title.
  • Forces companies to quantify the experience and education required for every position.
  • Exposes any gender pay gap in the organization. For example, in a department of software engineers, there should not be any discrepancy between pay between a male or female, if experience and education are of equal value.
  • Streamlines salary negotiations. When an organization is up front about its salary equation, it takes the guess work and negotiation out of the salary number. The process moves faster and more objectively.
  • Keeps hiring decisions honest and well thought out.

Cons of a transparent pay culture

  • Kindles the fires for frustrated employees. Some do a better job not knowing that the coworker that is challenging to work with on projects is actually paid $15,000 more for the same position.
  • Requires employees to accurately assess personal value compared to coworkers and industry. In order for employees to agree with the proposed salary, they need to be able to realistically see the value of their own personal skills, in comparison to the rest of the organization. This is a challenge for most
  • Creates a competitive workforce, potentially less team oriented.
  • Makes it challenging to continue to employ the mediocre employees and continue advancing them at a slower pace than star performers.
  • Reduces the ability to quickly hire in-demand talent. One of the reasons the federal government struggles to hire cyber talent is because of their inability to make a lucrative offer that competes with the industry.

Ironically, both pros and cons lists make a strong case, and I’m sure you can think of more for each list. It’s clear pay transparency is part personal preference and part organizational culture. In sales, it’s easy to see how to earn more money – simply sell more each month. If your coworker is selling more than you, they are making more money than you. Or in the federal government, experience and education is made to fit into the pay grades and steps to determine the salary amount. It is confining, especially for those employees that have been in the system for multiple years; however, it is clear and mostly definable.

It’s up to each organization to determine how much transparency is good for their organization. But both human resources and individual employees should be willing to have honest conversations about salary – including how an individual’s own salary compares to others with similar positions or similar skill sets. Growing in the ability to honestly value personal skills and education will help determine if your salary is inflated, on-point, or needs some growth. Don’t look at your personal budget and Amazon wishlist to determine your salary. Look at your resume and compare it to your industry to determine what you should be paid. Maybe the real key to pay transparency is to be honest with yourself.

Jillian Hamilton has worked in a variety of Program Management roles for multiple Federal Government contractors. She has helped manage projects in training and IT. She received her Bachelors degree in Business with an emphasis in Marketing from Penn State University and her MBA from the University of Phoenix.

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